Hamilton v. Sommers, 26720.

CourtSupreme Court of South Dakota
Citation855 N.W.2d 855
Docket NumberNo. 26720.,26720.
PartiesRoger HAMILTON, Plaintiff and Appellant, v. Richard A. SOMMERS, Melissa E. Neville and Bantz, Gosch & Cremer, Prof., LLC, Defendants and Appellees.
Decision Date29 October 2014

855 N.W.2d 855

Roger HAMILTON, Plaintiff and Appellant
Richard A. SOMMERS, Melissa E. Neville and Bantz, Gosch & Cremer, Prof., LLC, Defendants and Appellees.

No. 26720.

Supreme Court of South Dakota.

Argued March 24, 2014.
Decided Oct. 29, 2014.

Rehearing Denied Dec. 15, 2014.

855 N.W.2d 857

Dan Rasmus, Minneapolis, Minnesota, Timothy L. James, Yankton, South Dakota, for plaintiff and appellant.

855 N.W.2d 858

Thomas J. Welk, Jason R. Sutton, Meghan K. Woster, Boyce, Greenfield, Pashby & Welk, LLP, Sioux Falls, South Dakota, for defendants and appellees.


WILBUR, Justice.

¶ 1.] Roger Hamilton appeals summary judgment dismissing his claims of legal negligence or malpractice and breach of fiduciary duty brought against his former attorneys. We affirm in part, reverse in part, and remand.


[¶ 2.] This case began as a dispute related to 112 bee sites located in Marshall, Roberts, and Day counties in northeast South Dakota. In order to place bee hives onto private property, the hive owner must secure written permission from the landowner and file the permission slip with the South Dakota Department of Agriculture (Department). Here, the 112 sites were previously registered to James Paysen. Paysen sold the 112 sites in the mid–1990s to John Kelley; but significantly, Kelley did not register them.1 In 2006, Kelley sold the 112 sites to Adee Honey Farms, which was owned by Richard Adee.

[¶ 3.] Around the same time as Adee's purchase, plaintiff/appellant Roger Hamilton, a local beekeeper, learned that Kelley was “going under.” Hamilton obtained an “abandonment map” from another local beekeeper (Mike Block) to determine what sites may be available. Block also prepared and gave Hamilton a revocation form used to revoke a landowner's permission. Using the map, revocation forms, and new permission forms, Hamilton acquired 10 bee sites formerly registered to Paysen on which Adee had unregistered hives. Block, along with another regional beekeeper (Monte Amman), acquired the other 102 sites. Hamilton and Block drove together to Pierre to register their permission forms with the Department.

[¶ 4.] Claiming the 112 sites as his own, Adee petitioned for an administrative hearing seeking to have the sites registered in his name. The hearing occurred on May 15, 2007. Hamilton, Block, and Amman prevailed; thus, the Office of Hearing Examiners found Hamilton had properly registered his 10 bee sites.

[¶ 5.] Following the administrative hearing, Adee sued Hamilton, Block, and Amman on August 25, 2007, jointly and severally, for interference with business relations and/or expectancy, unfair competition, and civil conspiracy (Underlying Lawsuit). Seeking representation, Hamilton, Block, and Amman met with attorneys Richard Sommers and Melissa Neville of Bantz, Gosch & Cremer, L.L.C. (collectively “Appellees”) on September 27, 2007, in Aberdeen, South Dakota.

[¶ 6.] At the meeting, Appellees discussed the potential conflict of interest that could occur when representing all three defendants. Appellees asked whether Hamilton, Block, or Amman had insurance coverage that would compel the insurance carriers to respond to Adee's suit. Block and Amman replied affirmatively. Appellees wrote a demand letter to Block and Amman's carrier requesting that the insurance company defend the lawsuit, which the carrier declined. Hamilton allegedly said he did not have insurance;2 Appellees did not inquire any further. In hindsight, Hamilton did, in fact, have insurance in that regard. At the meeting's

[855 N.W.2d 859

conclusion, Hamilton, Block, and Amman orally agreed to Appellees' representation.

¶ 7.] On October 3, 2007, Appellees sent a letter to Hamilton, Block, and Amman confirming the joint representation and enclosing a conflict of interest waiver. Block and Amman signed and returned the waiver; Hamilton claims he never received, signed, or returned the waiver.

[¶ 8.] On July 7, 2009, Adee offered to settle solely with Amman if Amman transferred his bee sites to Adee and testified against Hamilton and Block in the Underlying Lawsuit. Appellees informed Hamilton, Block, and Amman of the settlement offer. Amman stated that he could not settle because, unbeknownst to Hamilton, Block, and Appellees, he had sold his business “including bee hive locations” on January 5, 2009, to Whetstone Valley Honey, Inc. (Whetstone). Amman's sale undercut the defense's theory that Adee had no legally protected interest in the bee sites because the permissive use was revocable at any time and, thus, the bee sites could not be sold. Additionally, the sale valued each bee site at approximately $5,000, allowing Adee to precisely state his alleged damages. Surprised by the sale, Appellees explained to the defendants that it was a major problem for their defense.

[¶ 9.] The next week on July 13, 2009, Judge John Flemmer held a pre-trial conference in the Underlying Lawsuit. There, Judge Flemmer denied Appellees' motions to exclude evidence of Amman's sale and for a continuance to add witnesses who could explain the sale. During the conference, Appellees recognized there may be a conflict of interest between defendants if evidence of the sale was presented stating: “there may be an irretrievable conflict now between Mr. Amman and the other two Defendants.”3

[¶ 10.] After the pre-trial conference, Appellees raised the possibility of settling. Adee's demand was a settlement with all defendants or none. Hamilton expressed reservations about settling, but, eventually, Hamilton, Block, and Amman signed a settlement agreement on July 17, 2009. Under the settlement terms, Hamilton, Block, Amman, and Whetstone agreed to transfer their interests in the bee sites to Adee and to send landowners letters requesting they register their sites with Adee. Additionally, Hamilton, Block, and Amman agreed to pay Adee $7,500 for honey delivery to the bee sites' landowners for the 2009 season.

[¶ 11.] After the settlement, Hamilton hired a new attorney (John Wiles) and advised Appellees that he did not intend to comply with the agreement. Block also hired new counsel (Lee Schoenbeck) and refused to comply with the agreement. Adee moved to enforce the agreement, and during a hearing, Judge Flemmer rejected Hamilton and Block's argument that the settlement was unenforceable because of duress or fraud. As part of the court's findings of fact, Judge Flemmer specifically found that Hamilton had signed the conflict waiver form that Appellees claim they mailed to him. Hamilton did not appeal Judge Flemmer's decision.

[¶ 12.] On September 29, 2010, Hamilton sued Appellees asserting three causes of action: legal malpractice, breach of fiduciary duty, and negligent infliction of emotional distress, all based on an alleged conflict of interest relating to Appellees' representation of co-defendants Hamilton, Block, and Amman in the Underlying Lawsuit.

[855 N.W.2d 860

On May 31, 2012, Hamilton amended his complaint adding an allegation of legal malpractice for Appellees' alleged failure to properly investigate whether Hamilton had applicable insurance coverage.

¶ 13.] During discovery, Hamilton retained David Lillehaug, then a partner at a Minneapolis law firm, as an expert witness.4 As to the conflict of interest claim, Lillehaug opined that the seriousness of the conflict between Hamilton, Block, and Amman made the conflict of interest non-consentable, and, even if it were consentable, Appellees breached the standard of care by failing to obtain informed consent from Hamilton. Also, Lillehaug opined that Appellees breached the standard of care by failing to withdraw or move for continuance when Adee offered to settle with only one defendant (Amman) when Amman's sale came to light. Lillehaug based his conflict of interest opinion on his practice under the Model Rules of Professional Conduct Rule 1.7, and in his interpretation, its similarity with South Dakota's Rules of Professional Conduct Rule 1.7. Lillehaug testified, in his opinion, that “the standard of care with respect to conflict of interest ... is essentially a national standard of care and that there is nothing unique about South Dakota in that regard.” As to the insurance investigation claim, Lillehaug opined that Hamilton's statements that he had no insurance “warrant[ed] further inquiry and investigation.” Lillehaug based his insurance investigation opinion on his career experience, which occurred almost entirely in Minnesota, and on information from other attorneys, including two attorneys licensed to practice in South Dakota (one based in Washington, D.C.).

[¶ 14.] Appellees moved to strike Lillehaug's opinions asserting he applied the wrong standard of care to both the conflicted representation and insurance investigation claims. Appellees also moved for summary judgment asserting Hamilton's failure to meet his initial burden of presenting evidence to support his claims. Hamilton agreed to dismiss his negligent infliction of emotional distress claim.

[¶ 15.] On April 15, 2013, the circuit court, Judge Gene Paul Kean presiding, granted Appellee's motion to strike, stating, Lillehaug “lacked adequate foundation to testify about the applicable standard of conduct” and his expert testimony would be “irrelevant, unhelpful to the jury, and confusing to the jury because his opinions [were] based upon a national...

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